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August 25, 2009
Taylor Bean Mortgage Files for Chapter 11, in Talks with FDIC
Taylor, Bean & Whitaker Mortgage Corp., the 12th largest U.S. mortgage lender, is set to file for chapter 11 as regulators question its involvement with Colonial BancGroup Inc., Bloomberg News reported yesterday. The company said that it will operate on a 'scaled-down basis and begin work recovering, restructuring and possibly liquidating its assets.' The Ocala, Fla.-based company also announced the appointment of two new directors and the naming of Navigant Capital Advisors' Neil Luria as restructuring officer. The announcement comes after Taylor Bean was expelled from the ranks of mortgage lenders approved to do business with government-sponsored mortgage agencies earlier this month because of concerns about possible fraud, the government said at the time. The terminations followed a failed attempt by Taylor Bean to lead an investor group that would pay $300 million for a controlling stake in Colonial, one of its lenders that has since failed and been taken over by BB&T Corp. Taylor Bean said it is in talks with the Federal Deposit Insurance Corp., the receiver for Colonial, about getting access to about 100 accounts frozen by Colonial. Read more.
name='2'>Obama to Nominate Bernanke to Second Term at Fed
A top White House official said President Obama had decided to keep Ben Bernanke at the helm of the Federal Reserve because he had been bold and brilliant in his attempts to combat the financial crisis and the deep recession, the New York Times reported today. 'The president thinks that Ben's done a great job as Fed chairman, that he has helped the economy through one of the worst experiences since the Great Depression and that he has essentially been pulling the economy back from the brink of what would have been the second Great Depression,' White House Chief of Staff Rahm Emanuel said Monday night. White House officials said that Obama had effectively decided several weeks ago that he wanted Bernanke to continue, and that he formally discussed the job with him last week at a meeting with the Fed chairman in the White House. Bernanke, who spent most of his career as a professor of economics, most recently at Princeton, took over the Fed in February 2006. His current four-year term as chairman will expire on Jan. 31. He was a clear favorite among economists, especially those specializing in central banking and monetary policy. Read more.
name='3'>Bank of America, SEC Seek Approval of Settlement
Bank of America sought to win a federal judge's approval for its $33 million settlement with the Securities and Exchange Commission, telling the court that it decided to pay the penalty to avoid the hassle of defending itself against charges that it misled investors, The Washington Post reported today. In a court filing, Bank of America lawyers wrote they had 'significant defenses' against the SEC's claims that the bank failed to disclose to shareholders plans to pay billions of dollars in bonuses to employees of Merrill Lynch, but Bank of America said it decided to settle so that it wouldn't 'face the unnecessary distraction of a protracted dispute with one of its principal regulators.' The SEC also filed papers on Monday urging Judge Jed S. Rakoff of the Southern District of New York to approve the settlement. Judge Rakoff has expressed skepticism about the case, demanding to know why the SEC chose to file a case against the company and not the executives who made the decisions about disclosures of bonuses. He also wants to know how the SEC settled on the size of the penalty. Rakoff's refusal to endorse the settlement has been a setback for the SEC in its attempt to bring high-profile cases linked to the financial crisis. Read more (subscription required).
Bankruptcy Judge to Consider Cubs Sale Next Monday
A judge presiding over Tribune Co.'s bankruptcy case has agreed to expedited procedures regarding the company's sale of the Chicago Cubs baseball team, USA Today reported today. Judge Kevin Carey on Monday scheduled an Aug. 31 hearing and shortened notification procedures for motions related to the deal. In court papers Monday, Tribune attorneys outlined a two-step process that will culminate in the sale of the Cubs to the family of billionaire Joe Ricketts, founder of TD Ameritrade. The family agreed last week to buy a 95 percent stake of the team and its Wrigley Field home from Tribune for $845 million. Tribune attorneys indicated that a second bankruptcy petition will have to be filed in order to complete the deal. Read more.
name='5'>Milacron Businesses Emerge from Bankruptcy
Plastics processing company Milacron LLC said Monday that its businesses have emerged from bankruptcy following their sale to investors, Forbes.com reported yesterday. The new company, Milacron LLC, is owned by investors led by Avenue Capital Group and DDJ Capital Management LLC. In May, Milacron Inc. said it agreed to sell substantially all of its assets to a company formed by affiliates of Avenue Capital Group and DDJ Capital Management that held about 93 percent of the company's notes valued at about $175 million. Avenue Capital and DDJ took an $80 million loan to provide Milacron with $40 million. Milacron also received a $55 million in revolving credit from General Electric Capital Corp. Milacron LLC is now a privately-held business with a 'significantly stronger' balance sheet with less debt and more operating capital. The Cincinnati-area company said its liabilities are down by more than $500 million, or about 80 percent less debt than held by the previous company. It also has secured a $55 million revolving credit facility led by Wells Fargo Foothill, part of Wells Fargo & Co. and Bank of America. A $75 million second-lien term loan facility has been provided by the new investor group. The company once known around the world for machine tools sought chapter 11 bankruptcy protection last March. The company said then it had struggled with weakening sales of its plastics processing equipment and industrial cutting fluids.
Once known as Cincinnati Milling Machine Co., it was founded in 1884 and later became Cincinnati Milacron. It sold its machine tool division in 1998 and shortened its name to Milacron Inc. Read more.
name='6'>Sinclair Lender Pact Staves off Bankruptcy
The stock of Sinclair Broadcast Group Inc. soared Friday and continued climbing early Monday after the company announced an agreement with some of its lenders that has delayed, for now, concerns about a possible bankruptcy filing, The Business Journal reported yesterday. Baltimore-based Sinclair had disclosed in July that if it failed to repay its obligations on time, it might not even have a chance to file for chapter 11, as creditors could force Sinclair into bankruptcy. Sinclair was preparing for possible restructuring through bankruptcy. The company had $1.3 billion in outstanding debt as of March 31. The holders of Sinclair's 3 percent convertible senior notes and 4.875 percent senior subordinated notes possibly were going to require the company to buy back $500 million of that debt in the next 18 months. On Thursday, Sinclair executives announced they reached an agreement with holders of $437.8 million in notes for a private placement of debt securities scheduled to mature in 2014. Sinclair stock gained 70 cents, or 33 percent, in Friday trading, to close at $2.85 per share. Monday morning, it reached $3.54 before dropping back to $3.35, up 50 cents. Sinclair owns 58 television stations. Read more.
name='7'>Old Time Pottery Files for Bankruptcy
Old Time Pottery Inc., which operates 37 bargain home decorating stores in 12 states, today filed to reorganize under chapter 11, The Murfreesboro Post reported yesterday. The company has been unable to extend its line of credit agreements with its primary lender, but stated that it has sufficient cash flow to continue to conduct its business as usual in each of its stores and has no current plans to reduce its work force of 1,600 employees. Peterson said the company's board is developing a plan to further strengthen its business model and financial performance including the replacement of its line of credit. The company, formed in Murfreesboro, Tenn., in 1985, sells home decorating items, housewares, seasonal decorations, linens and rugs, glassware, dinnerware, framed art and mirrors, lamps, candles, silk plants and trees among its merchandise. Read more.
name='8'>Citadel Files Lehman Claim to Recover $470.5 Million
Citadel Investment Group LLC filed a claim seeking to recover as much as $470.5 million that the hedge fund believes it is owed from derivatives contracts tied to Lehman Brothers Holdings before its collapse, according to a court filing, the Wall Street Journal reported today. The amount being sought represents the value of the derivatives contracts, and also factors in costs Citadel incurred to replace the trades that were terminated when Lehman Brothers failed. It was not known how much the derivatives alone were worth. $470.5 million was calculated through terms set by an underlying contract after being set-off against collateral it held at the time of the Lehman bankruptcy. The proof of claim was submitted to the U.S. Bankruptcy Court for the Southern District of New York on Aug. 17, and others are expected to be filed by an Oct. 22 deadline. Citadel, which manages about $12 billion of assets, filed the claim on behalf of its Citadel Equity Fund. Read more. (Subscription required.)
name='9'>Federal Reserve Loses Suit Demanding Transparency
A federal judge on Monday ruled against an effort by the U.S. Federal Reserve to block disclosure of companies that participated in and securities covered by a series of emergency funding programs as the global credit crisis began to intensify, Reuters reported yesterday. In a 47-page opinion, Chief District Judge Loretta Preska of the federal court in Manhattan said the central bank failed to show that disclosure would cause borrowers in the Federal Reserve System to suffer 'imminent competitive harm' by stigmatizing them for using Fed-lending programs. Monday's ruling comes as lawmakers and investors demand greater disclosure in how the government manages a series of programs designed to lift the economy out of its deepest recession in decades. The case arose when two Bloomberg News reporters submitted requests under the federal Freedom of Information Act (FOIA) about actions the Fed took to shore up the financial system in 2007 and early 2008, including an expansion of lending programs and the sale of Bear Stearns Co. to JPMorgan Chase & Co. After the Fed resisted the request, Bloomberg sued to compel disclosure. Preska concluded that the Fed 'improperly withheld agency records in response to a FOIA request by conducting an inadequate search.' FOIA obliges federal agencies to make government documents available to the public, subject to various exemptions. Read more.
name='10'>Feds, 10 States Join to Fight Mortgage Fraud
Ten state attorneys general and four federal agencies announced that they are forming a task force to combat mortgage fraud, the Associated Press reported yesterday. Washington state Attorney General Rob McKenna issued a statement Monday saying that targets of the enforcement effort include equity-skimming, bogus foreclosure rescue, 'straw' purchases and unethical lending. McKenna's statement says he and Iowa Attorney General Tom Miller are leading the group, which includes the attorneys general of Arizona, Colorado, Illinois, Nevada, North Carolina, Massachusetts, Missouri and Ohio. Representatives of the U.S. Department of Justice, the federal Treasury, U.S. Department of Housing and Urban Development and the Federal Trade Commission also are joining the task force. Read more.
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